Basmati aroma fails to attract buyers, prices dip by 45%

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Falling basmati prices have left many rice millers and traders to the brink of insolvency over the past four months. The development seems to be a precursor to a renewed agricultural crisis in the state. Rice millers and traders are unable to pay for the basmati purchased from commission agents around five months ago. The agents are now advising farmers not to grow basmati in the coming season. Agriculture Department and Punjab Mandi Board officials are also discouraging farmers from growing basmati. The Mandi Board suffered a huge loss as a large number of farmers shifted from paddy to basmati last year. In 2013-14, the basmati prices peaked to Rs 4,500 per quintal, but this year the prices have not gone beyond Rs 2,400 per quintal. Owing to high prices in 2013-14, the state government encouraged farmers to grow more basmati last season as it requires less water for irrigation in comparison to paddy.

To boost basmati trading, the government announced a waiver of 4 per cent cess (2 per cent market fee and 2 per cent rural development fund) on the purchase of basmati. As over 8.5 lakh hectare area was under basmati cultivation last year, the state suffered a loss of over Rs 550 crore due to non-collection of cess on basmati, said Kulbir Singh Matta, District Mandi Officer, Faridkot. Due to cess waiving, the market committees at Faridkot and Muktsar suffered a loss of Rs 20 crore and Rs 42 crore, respectively. "Despite that, we failed to promote basmati cultivation as its prices crashed in the international market," Matta said.

News Source : The Tribune, New Delhi, 4 April 2015